AT&T Posts Higher Profit and Holds On to Its Subscribers

That was the lesson of AT&T’s latest earnings report on Tuesday. The company posted a healthy profit in the second quarter and said it was “encouraging” that most of its customers had remained loyal despite the rising costs of its wireless data plans and other policy revisions.

The company reported that its net income rose 8.7 percent to $3.9 billion, or 66 cents a share, in the second quarter from the year-ago quarter. It emphasized that its churn, the rate at which subscribers leave the carrier, was at a record low of 0.97 percent.

All this despite the fact that AT&T has, in the past year, made a number of controversial changes to its policies, like raising the costs of its data plans, doubling its upgrade fee for new phones and throttling the speeds for customers with unlimited data plans. Along with other carriers, like Verizon, it has made these types of moves as the business starts to focus on how much people use mobile data to work and play, not how much they talk on the phone.

John J. Stephens, AT&T’s chief financial officer, said that 27 million smartphone customers, two-thirds of the total, were subscribers to the company’s tiered data plans, and that of those, 70 percent had chosen the more expensive plans.

In response to an analyst’s questions about mobile revenue, he said the company felt comfortable because even though it raised its data plan prices for new subscribers in January, customers were not leaving.

“The fact that’s been taken into account with low churn is just another encouraging piece,” he said.

Mr. Stephens added that the company had dealt with customers who still had older, unlimited data plans by imposing its new throttling policy, in which it slows data speeds after a customer hits a certain limit of use.

“Those extraordinary consumers have been addressed, and that process has been in place for more than a few months now,” he said. “Quite frankly, once again, I look to churn as an indicator of how that’s being accepted and how that’s impacting our customer base, and we feel good about the progress we made there.”

AT&T, based in Dallas, said revenue climbed to $31.6 billion in the quarter, about even with last year but a 2 percent increase when adjusted for the sale of an advertising unit, which includes the yellow pages business.

Analysts had expected 63 cents a share on revenue of $31.7 billion, according to a survey by FactSet. Shares of AT&T were down 75 cents, or 2.12 percent, at closing Tuesday.

The company also said that strong mobile device sales, new customers and revenue from subscribers drove growth in the quarter. It sold 5.1 million smartphones and added 320,000 contract subscribers, the most valuable type of customer. Its average monthly revenue per subscriber increased 1.7 percent, to $64.93.

The iPhone continues to be an important product for AT&T. The company activated 3.7 million of them in the quarter, more than the 2.7 million iPhones sold by Verizon in the same period. AT&T said 22 percent of customers buying iPhones were new to the company, meaning it is managing to lure some subscribers away from other carriers.

Following a move by Verizon, AT&T recently introduced shared data plans, which allow subscribers to share a set amount of wireless data across multiple devices, like smartphones and tablets. Unlike Verizon, AT&T will offer these shared data plans as a new option on top of its current tiered plans. Verizon discontinued its tiered data plans for new subscribers in favor of the shared plans.

Chetan Sharma, an independent mobile analyst, said he found AT&T’s low churn rate the most remarkable part of its earnings report.

“That means they’ve got a grip on their subscriber base,” he said in an interview.